Buying or selling a property is probably the biggest financial commitment you will ever make in your lifetime. But naturally we can get so wrapped up in emotion when it comes to buying/selling a property that we rarely take the time to research other costs involved. This is why we strongly believe that it’s crucial to fully understand all the factors that go into influencing the purchase, no matter how overwhelming they might seem at the time.

When you decide to buy a property, the conveyancer or transfer attorney will start to prepare the transfer documents on receipt of the title deed, personal details and confirmation that all conditions have been met by both parties. The attorney will then start the process to register the transfer of the property in the Deeds Office. The transfer costs that you will have to pay are made up of four main fees that you will need to pay to the transferring attorney who in turn will pay the respective parties, including themselves.

The transfer costs are as follows:

1. Conveyancing fees

These fees are payable to the transferring attorney for carrying out the legal procedures required to change the ownership of the property into your name and for generating all the necessary documentation. The amount is calculated on a sliding scale based on the purchase price of the property and is the only one of the transfer costs which is negotiable. In the event of the transaction being repeat business, then attorneys may consider a reduced charge. It is worth bearing in mind that conveyancing fees are subject to VAT.

2. Administration fees

This is a set, non-negotiable minimum fee paid to the transferring authority for costs relating to the Deeds Office search, to verify the respective parties for FICA and for petty cash expenditure such as postage. The FICA verification has to do with compliance with the Financial Intelligence Centre Act which requires the attorney to verify the identity and address of the parties and in the case of you, the buyer, the source of funds for the transaction. VAT is also applicable in this case.

3. Deeds Office fee

This transfer cost is paid to the transferring authority which will then pay this over to the Deeds Office. The Deeds Office requires this fee as a result of their having to update their records. The way it is calculated is according to the purchase price and is neither negotiable nor subject to VAT.

4. Transfer duty

This tax is payable on transfer of the property and is paid to SARS by the transferring authority. It is calculated depending on whether the property is registered for VAT or not. No transfer fee is required if the purchase price is below R750 000. A property exceeding this amount will require a transfer fee calculated according to a sliding scale. If the property is VAT registered, instead of the transfer fee, VAT becomes payable on every rand of the purchase price calculated at 14% of the purchase price.

5. Clearance certificates

There are also costs that you, as the buyer of a property, will have to pay related to clearance certificates which are arranged and collected by the transferring authority. They will then pay SARS for the tax clearance certificate and the local authority to verify that there are no outstanding rates and taxes payable by the Seller. Without these clearance certificates as proof of payment, the transfer cannot go through.

So if you are in the process of buying that special home, take heed of what transfer costs are applicable to your case. We believe that what is crucial at this junction is to choose your estate agents with care and make sure your homeloan consultants have expert knowledge of local conditions, trends in property prices and the resources to provide you with all the facts you need to make important decisions. You need to partner with a company that will put your needs first, honour the relationships you have set up with an estate agent and provide you with a sense of belonging to a dynamic team. Then you too could be well on your way to purchasing that special property for you and your loved ones.